Merry Christmas and a Happy New Year

From all of us here at Dynamo, we’d like to take this opportunity to thank you for your ongoing support over the course of 2022.

It’s been something of a rollercoaster year with many challenges along the way. However, greater market stability has emerged and after conversations with many lenders, we’ve been encouraged by a host of exciting plans which are already in place for Q1 2023 and beyond.

With pricing trending in the right direction, you can be sure of some increased competition across the BTL sector and plenty of innovation along the way, meaning the BTL market is ready to hit the ground running in 2023.

Whilst we are gearing up for a hectic start, we hope that you get the opportunity to take a break, recharge those batteries and enjoy the festive period. So, here’s to a very Merry Christmas and a healthy, prosperous New Year.

REASONS FOR LANDLORDS TO BE CHEERFUL IN 2023

There’s no getting away from the fact that it’s been a tough year for many people, including landlords, especially over the past few months.

Many landlords are currently facing a tougher time securing the right type of finance in the midst of a challenging BTL marketplace fuelled by limited product choice and rising mortgage rates.

This was evident in the latest mortgage market analysis by Octane Capital which revealed that the number of buy-to-let mortgage products on offer has fallen by 51.1% in the past year, down from 3,264 in November 2021 to 1,595 in November 2022.

STUDENT LETS DEMANDING LANDLORD ATTENTION

Overwhelmed and under-stocked, the student rental market is on the verge of reaching breaking point. This strong statement emerged in research from property developer Stripe Property Group which revealed that there are now three students for every student bed available.

According to the study, there are now 2,180,419 full-time university students across the UK, 8% more than there were prior to the pandemic (2019/20). At the same time, there are just 697,734 student beds available to them and while this has been steadily increasing, the number of beds has grown by just 6% when compared to pre-pandemic levels.

As a result, there are now 3.1 students for every one bed available to them, up from 3 students for every one bed in 2019/20. That’s a current shortfall of almost 1.5m student beds to meet the demand required across purpose-built student accommodation.

EXPEDITING THE GREEN MORTGAGE REVOLUTION THROUGH EDUCATION AND CLARITY

Here at Dynamo, we’re seeing more landlords carefully assessing the pros and cons of new builds with an eye on a more energy efficient future for their portfolios. By this I mean in light of the government’s plan for a compulsory energy performance certificate rating of 'C' on new tenancies by December 2025, and on all rented properties by December 2028. Although, it’s prudent to point out this is not yet set in stone.

This plan has also resulted in a huge amount of talk about how much existing upgrades may cost and with the bulk of portfolios containing large levels of older property types, then landlords have to take these potential costs into account. A factor which is especially relevant as well over two-thirds of landlords reportedly still own rental properties with an EPC rating of D or below.

THE VALUE OF TOWNS AND CITIES WITH JUST ONE UNIVERSITY

The student population and landlords who have built portfolios to incorporate a large element of student lets and houses in multiple occupation (HMOs) in and around university towns and cities across the UK have not had it easy over the past few years. Thankfully, schools and universities are now largely back to ‘normal’ and just about to start, or have started, the new academic year.

To coincide with this, Paragon Bank has revealed the locations where landlords letting to students can achieve the strongest yields. Analysing mortgage applications for properties located in popular student postcodes, the lender found that landlords providing student accommodation in towns or cities with just one university typically achieve the highest yields.

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